27 Oct 2015

Nelson Marlborough DHB's $2m budget blowout

8:39 pm on 27 October 2015

The Nelson Marlborough District Health Board said an ongoing deterioration in its balance sheet was a significant concern, but insists it is not the result of poor management.

Chief executive Chris Fleming told board members today that its budget was out by almost $2 million in the year to date, because of higher demand for some services, and an oversight in predicting costs of clinical consumables.

A loss of $570,000 was reported in the month of September compared to a planned surplus of $292,000 which was an $862,000 unfavourable result. It has brought the year to date result to an unfavourable budget outcome of $1.86 million, board figures showed.

Mr Fleming said despite a "thorough line by line review", clinical services expenditure was set too low. The budgets were increased by $1.1m for the 2015/16 year but when they were set in October 2014 they were already $1m over.

He said no health services would be cut to account for the oversight. He said the board would instead be looking at a reduction in the planned investment in developing the Nelson Marlborough health system, in the lead up to the planned Nelson Hospital redevelopment in 2020.

"We had hoped to be able to invest about $6m in new initiatives this year, but it looks like we're going to have to constrain that to about $4.5m

"While reducing the funding available is not the greatest of news, we are one of the few health boards able to invest in new initiatives, so we're being deliberately hard on ourselves to make sure we go forward successfully. In 2020 we want to rebuild Nelson Hospital without suffering financial challenges at that stage as well," Mr Fleming said.

He said this month had seen an easing of financial pressure, after a "significant winter peak" created a lot of demand on services. He added that staff costs were very close to budget.